Mystique in tow, Dunkin' Donuts ready to make splash in Utah

Food • Dunkin' Donuts' debut is highly anticipated by many, but lost on others.

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This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

To the uninitiated, the Utah debut of Dunkin' Donuts this week in Salt City probably will be greeted with a shrug and the query, "What's all the fuss about?"

But to the faithful, whether they be East Coast transplants, doughnut shop aficionados or hot java mavens, the dawn of the Dunkin' age out West is almost more than they can bear.

"Dunkin' Donuts has awesome doughnuts, and their coffee is great," said Victoria "Tori" Pawlukiewicz, a 22-year-old Salt Lake City college student who grew up munching the sweet goodies when she visited family members in Massachusetts and at Boston Red Sox baseball games in Fenway Park, near where Dunkin' was founded in 1950.

"Although I can get their coffee in grocery stores, it's not as good as the [fresh] coffee in the restaurants. And in the mornings, the doughnuts [come out] still warm."

Still not convinced this is a big deal? Well, Dunkin' must be doing something right, because for the seventh year in a row the global chain has been ranked No. 1 in customer loyalty in the coffee category by Brand Keys, a New York-based brand and customer loyalty research consulting firm.

Chief rival Starbucks is No. 2 in a category where billions of dollars are at stake internationally, and where plenty will be on the line in Utah as the Dunkin' brand continues its march westward from its strongholds in the Midwest and the East. Dunkin' has 10,000 locations worldwide (17,000 if you count sibling Baskin-Robbins) versus 18,900 for Starbucks. Revenue at Dunkin' Donuts stores open at least a year rose 1.7 percent in the latest quarter, versus 6 percent at Starbucks.

When the Dunkin' Donuts restaurant opens Tuesday in Salt Lake City across from the Main Library at 217 E. 400 South, it will be the first of 23 outlets planned along the Wasatch Front and northern Utah within the next five years, employing more than 1,000 people.

In the coming months, at least two other restaurants are set to open in Salt Lake, both along 2100 South, at 863 East and near 1400 East. Other announced sites include South Jordan, Midvale, Draper, Bountiful and Ogden.

"What's driving our expansion is the popularity of the brand in general and our long-standing reputation on the East Coast," said Monica Apodaca, a field marketing manager at Dunkin' Donuts. "The population is migrating West, so there's a big demand for the brand."

When Dunkin' Donuts went public last year, it said in its filing that its core markets in New England and New York had a shop for every 9,700 people. The company added that it intended to focus on developing other markets east of the Mississippi River, where it had one store for every 48,400 people.

In a murky sort of way, Dunkin's arrival in Utah was almost its second coming.

In 2001, its then-owner, United Kingdom-based food and liquor conglomerate Allied Domecq PLC, announced plans to open a half-dozen Dunkin' Donuts shops along the Wasatch Front. Although the plans fizzled, Dunkin' Donuts has oddly became part of a Salt Lake urban myth, with old-timers insisting they remember a Dunkin' Donuts store in Salt Lake City in the late 1990s near the old police station (it was actually a Winchell's Donut House) or other locations in Provo and Ogden.

Myths aside, the company's model has changed since then. Today, virtually all Dunkin' Donuts stores are operated by franchisees, with reported sales last year topping $6.9 billion. In Utah, that's Sizzling Platter, a key player in the Western restaurant market. The privately held company owns and manages 185 restaurants in seven states under the Sizzler, Red Robin, Hoppers and Little Caesars brands. Sizzling Platter's multi-unit agreement with Dunkin' Donuts is to also develop restaurants in El Paso, Texas, Las Cruces, N.M., and Denver over the next several years. Six restaurants are open in El Paso and an outlet is set to open in Las Cruces in July.

Sizzling Platter CEO Ted Morton is understandably excited about the Dunkin' Donuts prospects, noting that during negotiations the number of outlets it agreed to open in Utah went from 16 to 23.

"From your first cup of iced or hot coffee, with a sweet indulgence, to our breakfast and lunch sandwiches, we believe it's a perfect fit for those on the go or who want a comfortable break in their day," he said.

Whether Dunkin' actually has the best-tasting coffee is, of course, a matter of opinion. For its fans, there's nothing like a fresh cup from the shops. And in a national test by Consumer Reports, Dunkin' Donuts Dark Roast fared well, coming in third, behind top-rated Starbucks House Blend and No. 2 Green Mountain Signature Nantucket Blend.

Anecdotally, Dunkin' roasted varieties that are available in Smith's Food & Drug stores, Walmart, Target and Walgreens sometimes don't fare as well. Its coffee is manufactured by J.M. Smuckers, whose brands include household names such as Folgers, Jif, Pillsbury and Hungry Jack.

Perhaps the thing that sets Dunkin' apart is convenience. In the East and Midwest, there is seemingly a shop on every downtown street corner. In addition to coffee and doughnuts, the restaurants offer a variety of sandwiches, hot chocolate and iced beverages. Drive-through windows are open 24 hours a day, seven days a week, and will be in Utah as long as there's a demand.

This fall in the Beehive State, customers will be able to choose from doughnuts decorated in colors for the University of Utah and Brigham Young University, as well as for other schools. On Tuesday, the grand opening of the shop on 400 South begins at 4:30 a.m.

Whether all this splash and dash will be a recipe for success in Utah is anyone's guess.

Look no further that the experience of the folks who brought Krispy Kreme to the Utah market in the early 2000s, armed with big plans for multiple stores. At one point there were thousands of locations nationwide, but then came the anti-carb revolution (which seems to have abated) and the Great Recession, which led to store closings and a scaling back of plans. Today, Krispy Kreme is down to 770 locations in 22 countries, and just two locations in Utah, in Layton and Orem (and bins in assorted convenience stores).

In the past two decades, Dunkin' has gone through its own financial adventures, having been the subject of nearly as many acquisitions, partnerships and lucrative sell-offs as it has varieties of gooey treats.

One of the acquisitions in 2005 was particularly sweet for Mitt Romney's Bain Capital private-equity firm and fellow investors the Carlyle Group and Thomas H. Lee Partners, according to an analysis by The Washington Post. The equity firms, which sold the last of their shares in August 2012, were able to increase the number of stores and launch the well-known marketing campaign "America Runs on Dunkin'." Their profit was $2 billion  three times each firm's investment.

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